Legalized sports betting has failed to generate the revenue expected in Rhode Island. The state initially budgeted for $23.5 million in gambling related revenues for the fiscal year ending in June 2019 (began in Nov. ’18). The target was lowered to $11.5 million in January, but R.I. lottery officials are reporting that the state has posted just 1.3% of that total ($150,000) to date. Governor Gina Raimondo attributed the shortfall to “a little bit [of a] later start than we thought”; wagering volume ($250 million anticipated vs. $813 million projected) and gambler performance (better than expected) have also forced the need for a rebalancing of the budget. While it’s all but assured that Rhode Island will fall short of January’s revamped projection, it should experience significant revenue growth in 2020; Raimondo signed a bill last week that will permit online sports betting within the state.
Howie Long-Short: The Patriots Super Bowl win contributed to a tough February for Rhode Island’s sportsbooks – the pair lost a combined $890,000 on $20.7 million in wagers during the month. They’re off to a better start in March, having raked in +/- $1 million over the first weekend of the NCAA tournament. The state is entitled to 51% of sports betting revenues (after expenses).
Rhode Island is certainly not a proxy for the country – it has just 2 licensed casinos – but “most of the states” that have passed legislation since PASPA was struck down have fallen short of projections. It’s certainly no coincidence that like Rhode Island, all but New Jersey (which out-earned Nevada for the 1st time in Jan.) failed to establish mobile/online as an option.
Rhode Island’s 2020 budget assumes sports betting will bring in $30.3 million in revenue, including $3 million in mobile fees. Democratic Senate President Dominick Ruggerio has acknowledged that the financial forecasts will need to be rebalanced (see: lowered) in the wake of fiscal 2019 results, but the nominal revenue Raimondo attributed to mobile – relative to the total income projected – makes me think they’re still getting bad “information” (or that they simply don’t understand the marketplace). New Jersey sportsbooks generated 80% of their January revenue from mobile and online platforms.
Once Twin Rivers begins taking online/mobile bets, business will pick up. It will become easier for residents of the state to place wagers and with Massachusetts yet to legalize sports betting, the Rhode Island licensee should pick up some action from residents of the neighboring state (via the William Hill app). For reference purposes, FanDuel claims 9% of its New Jersey business comes from those living in New York and another 4% from those based in Pennsylvania. The 2020 budget assumes mobile sports betting will be available next winter, but there’s a current push within the Assembly to have it in place by the start of the NFL season.
Rhode Island’s 2 casinos (Lincoln and Tiverton) are owned by Twin River Worldwide Holdings. On Friday, the company (which also owns the Hard Rock Hotel & Casino in Biloxi, MS) “added to its geographic base” closing on the purchase of Dover Downs Gaming & Entertainment. Shares of Twin River common stock subsequently began trading (at $29) on the New York Stock Exchange under the symbol TRWH.
Fan Marino: 75% of those who placed bets (against the spread) on the Super Bowl at Rhode Island’s 2 brick and mortar casinos took the hometown Patriots; as a result, the pair lost $2.3 million on the game. It’s not atypical for a sportsbook to take a loss on a big game – like the Super Bowl – when the hometown team covers. Fans bet with their hearts and the action tends to skew “towards the geographically favored team.” The books don’t move the lines to reflect the heavy action though, because doing so would leave them susceptible to sharp money (going the other way) taking advantage of mispriced odds.
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